As treaties and trade agreements are implemented this year, more U.S. companies are looking at the Association of Southeast Asian Nations for fresh business opportunities. Fortunately, a whole host of logistics and transportation service providers are laying the groundwork to overcome inherent infrastructure challenges.

Today, U.S. trucking companies face more regulations than any time in history—and they claim this “regulatory tsunami” is putting the clamp on U.S. productivity. During this session shippers will gain a better understanding of the current state of trucking regulations (HOS & CSA) and the impact they're having on capacity and rates.

Less-than-truckload transportation services provider YRC Worldwide (YRCW) said it has completed the official closing of its sale of a portion of its YRC Logistics business to strategic private equity investor Austin Ventures.

The deal was originally announced in late June and is part of a previously-stated strategy by the company to address its short-term liquidity needs, which includes considering sales of additional equity or pursuing other capital market transactions.

YRCW officials said the gross proceeds for the transaction were approximately $38.7 million of which YRCW received $33.6 million at the initial closing with an additional $2.3 million placed in escrow for further closings of foreign entities in the coming months along with $2.8 million placed in escrow for indemnification purposes.

They added that YRCW will retain its two China-based joint ventures, and the company will continue to offer customers complimentary logistics services through its strategic relationship with Austin Ventures through a commercial services agreement between YRCW and Austin Ventures.

When the announcement was first made in June, YRCW said the deal will form the basis for a new company specializing in international freight forwarding, customs brokerage, transportation management, truckload services, and dedicated warehouse and fulfillment services in North America, Latin America, Europe, and Asia.

This is not the first time in recent months YRCW has offloaded a piece of its logistics business. In November 2009, it sold the contracts, personnel, and equipment of the Dedicated Contract Carriage division of YRC Logistics for roughly $34 million. At the time of the deal, YRC Logistics President John Carr said this deal is a strategic move towards a more asset-light business model and aligns resources at YRC Logistics to focus on its core offerings, including transportation, distribution, and global services.

YRCW Chairman, President, and CEO Bill Zollars said in a statement that the recent deal with Austin Ventures also allows the company to focus on core offerings and at the same time continue to offer full global logistics solutions for shippers through a strong business relationship with the new company.

YRC Logistics President Carr officials said that the YRC Logistics management team will remain intact, adding that the financial wherewithal of Austin Ventures positions YRC to pursue new business development as well as growth through acquisition.

YRCW said it will retain all of its China-based operations and said that the strategic partnership with Austin Ventures will give customers of the new Austin-owned logistics company ongoing access to these capabilities.

“There will be no change in the way a customer’s business is handled, and they will benefit from advancements in the delivery of comprehensive supply chain solutions by both companies,” said Zollars. “In addition, the incremental liquidity from the transaction will support YRC Worldwide business growth.”

Future business growth is key for the company as it has incurred losses of more than $2 billion in the last 12 quarters. In its second quarter earnings, the company showed some sequential and annual gains, although the company posted quarterly net and revenue losses.

YRCW recorded a quarterly net loss of $9.5 million and $.01 per share, which is ahead of a net loss of $309 million and a $5.20 loss per share during the second quarter of 2009. Operational revenue at $1.12 billion was down 8.7 percent year-over-year, and total operating expenses at $1.1 billion were off by about 30 percent. Operating income for the quarter at $48.3 million was up significantly compared to a $294 million loss a year ago.

Pittsburgh-based SJ Consulting President Satish Jindel told LM that YRCW’s quarterly performance compared to other publicly-traded LTL players on a sequential basis in terms of tonnage increases and shipment increases was as good or better in some cases that its public competitors.

“This is an indication that YRCW is not losing market share anymore to competitors like they did three months ago or a year ago, which is positive,” said Jindel. “They are also focusing on pricing rather than pushing for volume gains, and it is an important message that they needed to convey from a customer and competitor point of view as a price war hurts everyone and prevents investment into the business for YRCW.”

About the Author

Jeff BermanGroup News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!

Get timely insider information that you can use to better manage yourentire logistics operation.

Recent Entries

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement partners Canada and Mexico in January dropped 1.2 percent to $89.3 billion.

In today's supply chain, the only constant is change.
Our white paper 'Change Your Perspective: Four Keys to Effectively Adapting to Rapid Change in the Distribution Center Environment' provides key insights on not only adapting to trends, but which trends will enable you to achieve running the warehouse of the future.